Intel cuts forecast as it struggles to gain foothold in mobile market

INTEL TRIMMED its forecast for 2011 PC unit sales, warning of softness in mature markets and sending its shares down more than 1 per cent even as its revenue outlook beat estimates.

The top maker of microprocessors for PCs now expects 8 to 10 per cent growth in unit shipments of computers this year, down from the low double-digits it had stuck to earlier in defiance of fears that market momentum was decelerating.

Intel’s processors are used in 80 per cent of the world’s PCs, but mobile devices from Apple’s iPad to Google Android smartphones are eating into laptop sales and Intel is struggling to gain a foothold in the fast-expanding mobile market.

Revenue in its Atom division, which caters to a mobile computing market, slid by 15 per cent to $352 million (€244.8 million).

“The mature market consumer segment is still soft, but the emerging-market consumer segment is healthy and growing,” said Intel chief executive Paul Otellini.

Intel’s tepid PC forecast and concerns about the economy overshadowed a solid quarter for the chip giant, with quarterly results and revenue forecast both trumping Wall Street’s expectations.

The chipmaker employs close to 4,000 staff in Leixlip, Co Kildare, and is investing $500 million in upgrading its plant there.

Intel expects average selling prices for its chips to increase as families in China and other emerging markets that are buying their first computers choose fairly high-quality PCs built to last.

Revenue in the June quarter was $13.1 billion, up 22 per cent on the same period last year and above the $12.8 billion expected by analysts. The company expects revenue in the current quarter of about $14 billion, give or take $500 million, versus the $13.5 billion analysts expect on average.

Mr Otellini said he was confident tablets would not replace small laptops, even after Apple’s blockbuster iPad sales in the second quarter.

He said Intel would be “hyper-competitive” in winning space for its processors in tablets using an upcoming version of Microsoft Windows. – (Reuters)